After a significant drop in November, the price of precision steel pipes experienced another rollercoaster ride in recent days. With a meeting between the leaders of China and the U.S. on December 2nd, where both sides reached constructive consensus on trade issues, steel prices were greatly boosted, with some local increases as high as 700 yuan/ton. On Monday, the market saw a significant补涨, but the futures trend was not optimistic, leading to a partial fall in steel prices by 300 yuan/ton, marking the start of a high-level correction phase. Amid market confusion, news of environmental restrictions and production cuts resurfaced, causing steel prices to surge again, and with the support of futures trends, the market saw another increase of around 100 yuan/ton today. In just three days, steel prices have seen dramatic fluctuations, resembling a rollercoaster ride.
Hebei Tangshan Municipal Development and Reform Commission recently issued a notice titled "Letter on Strictly Implementing the Peak Load Production Requirements for Blast Furnace Equipment in the Iron and Steel Industry." The notice states: "According to the 'Tangshan City Iron and Steel Industry Peak Load Production Plan for the Autumn and Winter of 2018-2019' issued by the city, districts and iron and steel enterprises should implement control and production reduction measures during the peak load production period by completely shutting down blast furnaces, and must not use methods like idling furnaces to substitute for the production reduction targets; if blast furnaces that have been continuously shut down still do not meet the prescribed production reduction ratio, partial shutdown of blast furnaces for specific time periods can be adopted for control and production reduction." The steel prices responded with an increase.
As of 10 AM on December 5th, Changli's part of the billet resources have increased by 10 yuan/ton again, now at 3,330 yuan/ton with tax included, with a total increase of 70 yuan/ton today. Resources in Anfeng around Tangshan have increased by another 50 yuan/ton, with a cumulative increase of 80 yuan/ton.
Currently, the steel market is lukewarm with both supply and demand weak. Due to environmental production restrictions, steel mills' production enthusiasm is limited, and downstream construction sites, particularly in northern regions, are seeing a gradual decline in demand. Even with market rumors, the expected price increase is likely to be capped, and the overall trend of the steel market is not very optimistic.
